This is your future

Published on June 27, 2014
Nalcor CEO Ed Martin says although costs of the Muskrat Falls hydroelectric project have increased by $800 million, it’s still the lowest cost option.  — Photo by Rhonda Hayward/The Telegram

And now for some news that’s completely beyond your control. Starting next week, Newfoundland ratepayers will see their power bills rise by an average of two per cent. That’s an annual adjustment announced around this time every year.
But that pales in comparison to the sledgehammer we’re going to get hit with when Muskrat Falls comes on stream in a few years.

On Thursday, Nalcor Energy released its long awaited (and oft postponed) new estimates for the cost of constructing the Labrador hydro project.

The grand total: about $7 billion, up about $800 million from the previous estimate. (That’s for this province’s portion; the Maritime Link is Nova Scotia’s contribution.)

Now, given the wild estimates thrown around by increasingly vocal critics of the project — some suggesting up to $8 billion, $10 billion and even more — Nalcor’s number should come as a relief, assuming you accept it at face value. Everyone knew the cost was going up. Less than a billion almost seems like we dodged a bullet.

Nalcor boss Ed Martin told reporters Thursday that about 90 per cent of the contracts for the project have been awarded. That means there’s little left other than productivity to jack up the costs further. And they still expect to get it done on time, by 2017.

This news is not good, of course; it’s just not as bad as expected. But that doesn’t mean this project is looking any less dubious as the days go on.

There are still unknowns. Nalcor plans to sell excess power across the Gulf, but will have to do so at bargain basement prices. The rise of natural gas has driven electricity prices into the dirt, and that means Newfoundlanders will pretty well have to pay for the whole shooting match through their monthly bills.

And speaking of bills, that estimate has also gone up. Martin says the average monthly bill will increase from the original $38 to $46, an average of seven per cent extra. That’s for a pretty modest monthly bill, though. It could get into hundreds of dollars a month extra for many customers.

None of this even accounts for numerous unexpected expenses Newfoundland and Labrador Hydro has encountered recently. Hundreds of millions more will have to be found to pay for proposed new line from Bay d’Espoir, as well as a new turbine for Holyrood.

In short, no matter the spin, electrical generation in this province has turned into a gaping money pit. And with the Public Utilities Board legislated out of the picture for much of it, ratepayers basically have no one to advocate for them — certainly not the government.

So, let the wailing continue, for what good it will do.

VOCM talk show host Paddy Daly probably put it best Thursday when he tweeted: “All we know for sure is that whatever you thought of (Muskrat Falls) before today’s update — you still feel exactly the same way. Right or wrong.”